Sysco Reimbursement May Be Available to Self-Insured Employer Despite Opt Out

Kegler Brown E-mployment AlertSeptember 23, 2010by Randall W. Mikes

In State, ex rel., Sysco Food Servs. of Cleveland, Inc. v. Indus. Comm. (2000), 89 Ohio St. 3d 612, the Ohio Supreme Court held that a self-insured employer was entitled to reimbursement from the state surplus fund pursuant to R.C. 4123.512(H) when, by final administrative or judicial action, it is determined that compensation or benefits should not have been paid. In response to the Court’s decision in Sysco, the Bureau created an additional assessment for self-insured employers to provide funding for what became known as a Sysco reimbursement. In 2006, the General Assembly amended R.C. 4123.512(H) to provide an opportunity to self-insured employers to opt out of Sysco reimbursement and thus avoid the assessment.

In State, ex rel., Extended Care Health Servs., Inc. v. Ryan, 126 Ohio St. 3d 12, 2010-Ohio-2452, the Bureau denied a request for reimbursement by a self-insured employer who had opted out of the reimbursement program. The employer, who had successfully appealed the allowance of additional conditions in court, requested reimbursement of compensation and medical benefits paid on account of the now-denied conditions up to the opt-out date. The Supreme Court held that the employer was entitled to reimbursement of medical expenses paid prior to the opt-out date. The Court also agreed that the employer would be eligible for reimbursement of compensation paid up to that date so long as the compensation was only paid on account of the now denied conditions. The Court, however, found insufficient evidence that the compensation at issue was paid solely for these conditions and, thus, denied reimbursement in this regard.

Accordingly, self-insured employers who have opted out of Sysco reimbursement should nonetheless look closely at this issue upon obtaining a reversal of an allowance or award of benefits in a subsequent court appeal.